Sam Jones has an engineering firm.He wants to build a new headquarters building.The building will cost $1,500,000.He will put down $450,000 and have a bank finance the remainder at prime plus 2 percent.The prime lending rate is currently 8.5 percent.Sam will withdraw the money for the down payment from his mutual fund account where he has earned 13% for the last ten years.What percentage of the building is being financed by the bank?

Question

Quizplus · Accepted Answer

Sam is financing $1,050,000 ($1,500,000 - $450,000) through the bank. The percentage financed is ($1,050,000 / $1,500,000) * 100% = 70%.

Sam Jones Has an Engineering Firm